Board to vote on $6M bridge loan, piercing tax cap

08/15/2014 10:00 AM |
Riverhead Town Board members at an April meeting. (Credit: Barbaraellen Koch)

Riverhead Town Board members at an April meeting. (Credit: Barbaraellen Koch)

Facing a $4 million deficit in next year’s budget, the Town Board will consider on Tuesday a pair of bills to keep its options open: whether or not to authorize a $6 million bridge loan to help plug the hole, and whether or not to pierce New York State’s 2 percent tax cap next year.

Those were two options out of three presented by Supervisor Sean Walter recently as solutions to close next year’s deficit.

“The alternate plan is that I don’t fund all the services of the town,” said Mr. Walter, who must deliver a tentative 2015 town budget by Oct. 1. “If the Town Board does not authorize the tax cap override, or the loan, my alternative plan is, I cut the budget by $4 million.”

Cutting the budget by $4 million would mean eliminating about 60 town jobs, Mr. Walter said.

Councilwoman Jodi Giglio and Councilman John Dunleavy have both said they oppose the bridge loan.

Mr. Dunleavy said he doesn’t want to put off paying the debt any further. The town has been allocating about $4 million per year in surplus funds to lower the tax rate for several years, but will no longer have that much money available to apply to the 2015 budget.

The bridge loan resolution would authorize the town to borrow up to $6 million from Suffolk County National Bank and would require that it be paid back in two, or possibly three years, according to Mr. Walter. The loan is the supervisor’s preferred choice, who hoped the town will be able to sell some land at the Enterprise Park at Calverton during that time in order to repay the loan. A study needed to get the ball rolling in that process arrived in town hall last week.

“If we don’t get any money in two years, we’re going to increase the taxes more than we’re going to increase them are now,” Mr. Dunleavy said at Thursday’s Town Board work session, where the issue was discussed.

“That’s an accurate statement,” Mr. Walter said. “If we’re successful at the loan, we’re heroes. If we’re not successful at the loan, it’s worse for the town.”

The town, if it authorized the loan, would not be required to borrow all $6 million, an option favored by Councilman George Gabrielsen.

“I’m in favor of having it available,” he said. “We have to make some cuts, and I’m talking about upper echelon cuts, not lower paid employees. We’re not passing a 12.5 percent increase. I think we’re going to land somewhere in between.”

He said a 12.5 percent increase is like saying, “As a board, we’ve failed, and we’re saying, ‘let’s pass it on to the taxpayers.”

Councilman Jim Wooten said he favors layoffs, but not for public safety.

“I’m not comfortable with 12.5 percent,” he said, indicating that he has been looking at other ways to reduce costs, such as having a four-day work week instead of five at Town Hall.

Piercing the tax cap requires a public hearing, which the town plans to hold on Sept. 16, but aside from that, it merely requires a majority vote of the board.

The town also is waiting to find out how many employees will accept a retirement incentive program designed to lower costs. The town won’t know the number of employees who take the incentive until September 3.

Mr. Walter said the retirement incentive will not reduce $4 million.

tgannon@timesreview.com